PRODUCTION PLANNING
AND SCHEDULING

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Production planning is the function of establishing an overall level of
output, called the production plan. The process also includes any other
activities needed to satisfy current planned levels of sales, while
meeting the firm's general objectives regarding profit,
productivity, lead times, and customer satisfaction, as expressed in the
overall business plan. The managerial objective of production planning is
to develop an integrated game plan where the operations portion is the
production plan. This production plan, then, should link the firm's
strategic goals to operations (the production function) as well as
coordinating operations with sales objectives, resource availability, and
financial budgets.

The production-planning process requires the comparison of sales
requirements and production capabilities and the inclusion of budgets, pro
forma financial statements, and supporting plans for materials and
workforce requirements, as well as the production plan itself. A primary
purpose of the production plan is to establish production rates that will
achieve management's objective of satisfying customer demand.
Demand satisfaction could be accomplished through the maintaining,
raising, or lowering of inventories or backlogs, while keeping the
workforce relatively stable. If the firm has implemented a just-in-time
philosophy, the firm would utilize a chase strategy, which would mean
satisfying customer demand while keeping inventories at a minimum level.

The term
production planning
is really too limiting since the intent is not to purely produce a plan
for the operations function. Because the plan affects many firm functions,
it is normally prepared with information from marketing and coordinated
with the functions of manufacturing, engineering, finance, materials, and
so on. Another term,
sales and operations planning,
has recently come into use, more accurately representing the concern with
coordinating several critical activities within the firm.

Production planning establishes the basic objectives for work in each of
the major functions. It should be based on the best tradeoffs for the firm
as a whole, weighing sales and marketing objectives,
manufacturing's cost, scheduling and inventory objectives, and the
firm's financial objectives. All these must be integrated with the
strategic view of where the company wants to go.

The production-planning process typically begins with an updated sales
forecast covering the next 6 to 18 months. Any desired increase or
decrease in inventory or backlog levels can be added or subtracted,
resulting in the production plan. However, the production plan is not a
forecast of demand. It is planned production, stated on an aggregate
basis. An effective production-planning process will typically utilize
explicit time fences for when the aggregate plan can be changed (increased
or decreased). Also, there may be constraints on the degree of change
(amount of increase or decrease).

The production plan also provides direct communication and consistent
dialogue between the operations function and upper management, as well as
between operations and the firm's other functions. As such, the
production plan must necessarily be stated in terms that are meaningful to
all within the firm, not just the operations executive. Some firms state
the production plan as the dollar value of total input (monthly,
quarterly, etc.). Other firms may break the total output down by
individual factories or major product lines. Still other firms state the
plan in terms of total units for each product line. The key here is that
the plan be stated in some homogeneous unit, commonly understood by all,
that is also consistent with that used in other plans.

PRODUCTION SCHEDULING

The production schedule is derived from the production plan; it is a plan
that authorized the operations function to produce a certain quantity of
an item within a specified time frame. In a large firm, the production
schedule is drawn in the production planning department, whereas, within a
small firm, a production schedule could originate with a lone production
scheduler or even a line supervisor.

Production scheduling has three primary goals or objectives. The first
involves due dates and avoiding late completion of jobs. The second goal
involves throughput times; the firm wants to minimize the time
a job spends in the system, from the opening of a shop order until it is
closed or completed. The third goal concerns the utilization of work
centers. Firms usually want to fully utilize costly equipment and
personnel.

Often, there is conflict among the three objectives. Excess capacity makes
for better due-date performance and reduces throughput time but wreaks
havoc on utilization. Releasing extra jobs to the shop can increase the
utilization rate and perhaps improve due-date performance but tends to
increase throughput time.

Quite a few sequencing rules (for determining the sequence in which
production orders are to be run in the production schedule) have appeared
in research and in practice. Some well-known ones adapted from Vollmann,
Berry, Whybark and Jacobs (2005) are presented in Operations Scheduling.

THE PRODUCTION PLANNING AND
PRODUCTION SCHEDULING INTERFACE

There are fundamental differences in production planning and production
scheduling. Planning models often utilize aggregate data, cover multiple
stages in a medium-range time frame, in an effort to minimize total costs.
Scheduling models use detailed information, usually for a single stage or
facility over a short term horizon, in an effort to complete jobs in a
timely manner. Despite these differences, planning and scheduling often
have to be incorporated into a single framework, share information, and
interact extensively with one another. They also may interact with other
models such as forecasting models or facility location models.

It should be noted that a major shift in direction has occurred in recent
research on scheduling methods. Much of what was discussed was developed
for job shops. As a result of innovations such as computer-integrated
manufacturing (CIM) and just-in-time (JIT), new processes being
established in today's firms are designed to capture the benefits
of repetitive manufacturing and continuous flow manufacturing. Therefore,
much of the new scheduling research concerns new concepts and techniques
for repetitive manufacturing-type operations. In addition, many of
today's firms cannot plan and schedule only within the walls of
their own factory as most are an entity with an overall supply chain.
Supply chain management requires the coordination and integration of
operations in all stages of the chain. If successive stages in a supply
belong to the same firm, then these successive stages can be incorporated
into a single planning and scheduling model. If not, constant interaction
and information sharing are required to optimize the overall supply chain.

User Contributions:

A good explanation about the production planning. In Planeaciondelaproduccion .com you can see more information about this subjet, about the models for the production planning, the caracteristics, the parametres and some articles about the history and the rol of the humans in the production planning.
Thanks a lot

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